China & the U.S.: from containment to a harmonious partnership

Chinese-U.S. relations can only be understood as a very long march from pasts rooted in very different cultures, and national histories dominated by national interests, geography and perceptions of each other.

Now, the relationship is dominated by economic interests and fear.

Never forget a lesson Henry Kissinger told many times: how can a country with a history of less than 300 years teach one with 3,000 years of culture ?

And what is Beijing's perception of that attitude?

He was the man who helped open the People's Republic to the U.S. and the West only 38 years ago.

In only 30 years, mainland China has transformed itself from a predominantly agricultural country to a market economy with the People's Liberation Army becoming the largest employer in the world.

America and China are entangled in the largest love-hate relationship of its kind.

On one side, the sight of watching a giant waking up on the other side of the Pacific causes anxiety, especially since the giant is of one billion people larger.

China is fed up with Uncle Sam's lessons as well. Sometimes it overreacts like a grown up teenager, showing insecurity in its new role in the wider world.

Like a student standing in front of his Harvard professor, the Chinese on all levels are transfixed by Washington and the U.S., wanting to be loved, respected, admired, equal to, and as successful as their mentor.

This may be one of the important misperceptions and mistakes of the Chinese leadership. Does China really want to become a second United States, or would it rather follow its own path? Is the American way of life, with its clear focus on consumption and external power projection, the best future concept for Beijing? Will China, with its 1.3 billion people, ever be loved by America or simply feared, even hated as an adversary because of its sheer size?

Until now, benchmarking against the U.S. has not led to a fruitful, pluralistic and open discussion in China about its own 'America Syndrome'.

The Chinese system lacks both imagination and different schools of thought in foreign affairs; it does not appreciate pluralism, nor does it openly discuss different options and solutions. Numbers must be as large as possible. A stiff and inflexible bureaucratic and hierarchical structure prevails. This would hold back any emerging country looking for different options, partnerships, friendships, and paths for the future. But the Chinese system has proven as well to be unusually flexible, changing and evolving so that it adopts to the changing conditions and circumstances. It is a learning system at the end but with reluctance of a too quick change as well.

"U.S. President Obama is wise to integrate and not confront China because history offers a clear lesson: whenever a strong and ambiguous new player arrives, containment leads to war not peace. They must instead be integrated; the sooner the better. This is the lesson from the rise of Prussia in the 19th century."

On the other side of the Pacific, when it comes to Chinese-American relations the United States are dominated by Washington, DC and in turn by Congress. Members of Congress represent the people in their districts and are strongly influenced by local issues; China generates in many an overwhelming fear of goods 'dumping' by Chinese producers, loss of American jobs and the lack of American human rights ideology. These are indeed the main hurdles to a true and equal partnership with the U.S.

Many well organized and funded interest groups are promoting the interests of 'small town America' and big American business in China, and not China's business in America. Similarly, unions fearing for jobs are deeply involved in funding political campaigns from first time Congress freshmen to Senators and even Presidents.

Washington, DC's mindset and political landscape is unlikely to change for years. China is good for U.S. exports, goes the thinking, but should limit its exports to the United States.

China is useful as a buyer of US treasury bonds - $800 billion so far - but otherwise should stay out.

American-fixated China has grown ever more dependent on exports to the U.S. and has vast sums riding on the now-weak greenback's success.

In this time of financial crisis, where ten percent unemployment combines complements a massive federal debt burden, it is naive to believe that America will soften their approach and favour an equal partnership.

In the eyes of the majority of Americans and politicians across party lines, China will remain an undesirable, suspicious and rather too large a self-invited guest at the table of power.

America will not open its high tech industries, including newer green energy activities, to the Chinese but will instead look to serve China's markets in this area. Beijing must look to Europe, which is much more relaxed and open about co-operation.

We will see many more low-level trade tensions and U.S. tariffs on Chinese goods pushed for by lobby groups and supported by strong forces in Congress, both Democrat and Republican alike. Already we have seen President Obama levy, in September, three-year punitive tariffs on all car and light truck tires imported from China, as well as protectionist action against China covering tubular goods, coated paper, potassium pyrophosphate and other phosphates. America will always have strong protectionist measures in place. The U.S. want to balance trade between the two countries, narrow the surplus and hasten renminbi appreciation.

China is returning to its ancient roots. After the opening of the Silk Road to Europe, China had already been the largest trading nation in the world for hundreds of years. They will be again in a new area of globalization.

Wu Xiaoling, Deputy Director of the Financial and Economic Affairs Committee and Standing Committee Member of China's 11th National People's Congress, was right to point out on October 23rd 2009 that the trade surplus is primarily caused by low cost goods manufactured in China and the West's shift from high volume production to high-tech development and services. Japan and German also have trade surpluses with the U.S. after many years of free floating their currencies against the dollar.

With higher U.S. deficits and greater unemployment, the dollar will likely weaken against other currencies, increasing the lobbying pressure to act against China.

During his visit to China in November, Barack Obama tried to open a new chapter in the relationship. He was successful. Why? His main achievement was that he told a Chinese student in Shanghai: "We do not seek to contain China's rise." The old Bush-era policy of containment, deep mistrust and even hostility is finally over.

"America will not open its high tech industries, including newer green energy activities, to the Chinese but will instead look to serve China's markets in this area. Beijing must look to Europe, which is much more relaxed and open about co-operation."

In the first eight months of George W. Bush's Presidency, until 9/11, his whole team was not focused on Al Qaeda, Afghanistan or Iraq, but focused on China and the perceived threat of its dominance in the Pacific. Secretary of Defence Donald Rumsfeld was particularly concerned. This was a primitive but powerful reflex: fearing the rise of another great power in the sphere of influence you yourself hardly control.

Obama is wise to integrate and not confront China because history offers a clear lesson: whenever a strong and ambiguous new player arrives, containment leads to war not peace. They must instead be integrated; the sooner the better. This is the lesson from the rise of Prussia in the 19th century. They ousted imperial Austria out of the German Reich, defeating them and later France, and forged a strong united Germany in 1871 under the successful Chancellor Otto von Bismarck. They enjoyed great military and economic power and academic success, but still looked to equal the United Kingdom - including having their own colonies.

The peaceful integration of Prussia and the new German Kaiser was never an aim for England, France or America. This fuelled its nationalism and the lust for the Great War of 1914 which was seen as a release of all the tensions built up over the previous decades. The war destroyed Europe and paved the way for Adolf Hitler and World War Two.

To contain China means isolating the newcomer and frustrating it. This would inflame the hidden power of Chinese nationalism. Therefore the peaceful integration of China into the world order must be the primary task of the United States.

The partnership approach fits into the new 'smart power' policy of the Obama White House, which favours global application of a double strategy of hard and soft power; of military strength and diplomacy looking for partnership instead of 'coalitions of the willing'. This new double strategy is not naive or soft, but a clever approach to foreign affairs.

Obama's second success has been to put climate change on the top of the Chinese agenda; this led to the sensational announcement of November 26 that China will target a 40-45 percent cut in carbon intensity by 2020, only one day after the U.S. declared a cut in absolute levels of CO2 emissions of 17 percent from 2005 levels. China could soon start to lead in this important area.

The reaction in the U.S. and EU to China's announcement was typical. Instead of welcoming this giant step from an emerging power, small politicians there argued that China will in the end produce more carbon dioxide because of its 10 percent annual growth. For them, the glass in China is always half empty. This was also the public perception of the West, rightly frustrating for Beijing, which should be applauded for making this first step.

It was clear from the beginning that China can and will not sign a binding agreement during the Copenhagen Climate Summit in December as it must keep its flexibility in case more economic problems arise in the future.

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Dr. Hubertus Hoffmann is a German geo-strategist, investor, internet-pioneer based in Berlin.
His three main focuses as a philanthropist are: - 'Networking a Safer World', with the largest global elite network in foreign affairs, the independent World Security Network Foundation (www.worldsecuritynetwork.com). - The Human Codes of Tolerance and Respect - promoting understanding and concrete actions for tolerance towards other religions,…